Skip to main content Skip to chat

Pros and cons of increasing your credit limit

September 26, 2019

Written by Barry Choi

Key takeaways

  • Perhaps your life situation has changed, or you’re planning to make some big purchases.
  • If you're responsible with your spending, then accepting or asking for a credit limit increase could be a good idea.
  • But if you're worried about your spending and don't have an immediate need for the extra credit, it may be smart to leave your limit where it is for now.

Pros and cons of increasing your credit limit

Whether it's through an offer made by your financial institution or you've been thinking about applying for a credit limit increase on your credit card, here are some things to consider.

Pros of getting a credit limit increase

Generally speaking, there are three main reasons why someone would want to increase the credit limit on their credit card:

Your life situation has changed: many people start with a reasonable credit limit, often between $1,000-5,000. Depending on your life situation, it may originally have been a good amount, but sometimes you may need more spending power.

You're planning on making more purchases: for example, if you're planning a big trip due to a special occasion like a honeymoon or anniversary, you may need to charge all your expenses to your credit card, which could be more than your current limit. You may also have a large purchase coming up, such as a laptop or tuition, where having the ability to pay with your card could help you manage the expense.

Avoid overlimit fees: a credit limit increase could come in handy if you carry a balance and tend to exceed your limit often. Check to see if your credit card charges overlimit fees.

Cons of getting a credit limit increase

As you can imagine, there are also a few scenarios where it's in your best interest to decline or not ask for a credit limit increase on your credit card:

You're worried about your spending: having an increased credit limit means you can charge more purchases to your card. If you've had spending issues in the past or you're worried you'll go into debt, then you're probably better off keeping your limit where it is.

You don't need it: having access to additional credit can be convenient, but if you don't need it, why get it? Many people have multiple credit cards and access to a line of credit, so perhaps you already have enough credit for your needs.

If there are additional cardholders: any authorized users—meaning additional cardholders—can use the limit and not just you. So there's always that risk that comes with an increased limit.

How a credit limit increase affects your credit score

Accepting a credit limit increase may affect your credit score depending on the circumstances.

Increases in your credit limit could affect your credit score with more credit you can use and impact your debt-to-equity ratio (debt-to-equity ratio is one of the factors used by lenders to determine your availability for new credit).

Should you increase your credit limit?

If you're responsible with your spending, then accepting or asking for a credit limit increase on your credit card could be a good idea. But if you're worried about your spending and don't have an immediate need for the extra credit, it may be smart to leave your limit where it is for now.


This article or video (the “Content”), as applicable, is provided by independent third parties that are not affiliated with Tangerine Bank or any of its affiliates. Tangerine Bank and its affiliates neither endorse or approve nor are liable for any third party Content, or investment or financial loss arising from any use of such Content.

The Content is provided for general information and educational purposes only, is not intended to be relied upon as, or provide, personal financial, tax or investment advice and does not take into account the specific objectives, personal, financial, legal or tax situation, or particular circumstances and needs of any specific person. No information contained in the Content constitutes, or should be construed as, a recommendation, offer or solicitation by Tangerine to buy, hold or sell any security, financial product or instrument discussed therein or to follow any particular investment or financial strategy. In making your financial and investment decisions, you will consult with and rely upon your own advisors and will seek your own professional advice regarding the appropriateness of implementing strategies before taking action. Any information, data, opinions, views, advice, recommendations or other content provided by any third party are solely those of such third party and not of Tangerine Bank or its affiliates, and Tangerine Bank and its affiliates accept no liability in respect thereof and do not guarantee the accuracy or reliability of any information in the third party Content. Any information contained in the Content, including information related to interest rates, market conditions, tax rules, and other investment factors, is subject to change without notice, and neither Tangerine Bank nor its affiliates are responsible for updating this information.

Tangerine Investment Funds are managed by Tangerine Investment Management Inc. and are only available by opening an Investment Fund Account with Tangerine Investment Funds Limited. These firms are wholly owned subsidiaries of Tangerine Bank. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.